Yahoo! is a day closer to buying hip blogging platform Tumblr for US$1.1 billion, with the board of the company signing off a slightly higher offer yesterday.
The Wall Street Journal reported the Yahoo! board has agreed to pay US$100 million more than initially discussed to snap up six year old Tumblr, which last reported annual revenues of US$13 million.
Yahoo! CEO Marissa Mayer is desperate to find a youth-oriented user base and secure a mobile content presence. Yahoo! will use be able to use Tumblr user data to present offers to advertisers and build solutions for Tumblr that enable it to monetize its platform.
Tumblr has 107 million blogs, 50 billion postings in 12 languages, and is ranked globally as the 32 most popular website.
“Tumblr is in good shape because everyone is moving off Facebook, which is becoming a utility service and is very restrictive creatively,” said Oliver Wilton, social media director at Ikon Communications. “Also, since Facebook brought ads into the newsfeed the site has been alot more commercialised.”
If the deal is closed, it will likely herald an about-turn in the attitude of Tumblr CEO David Karp to let branded content pervade the blogging and social platform.
Ikon’s Wilton said he would be initially nervous about placing any of his brand clients onto Tumblr, because of the ability of users to poke fun at advertisers by quickly creating funny GIFS and memes. If Tumblr becomes clogged up with Internet ads, the user base will simply push on and “go somewhere that is not polluted by the ad-verse.”
The brutal reality is that Tumblr cannot make money on its own. Evolve Social managing director David Wesson said that it was clear Tumblr was running out of money and needed financial muscle to continue to survive. It recently closed its multimedia project, Storyboard, last month, amid speculation it couldn’t fund it.
"Obviously one can't exist without the other and with the recent shut down of Tumblr's innovative storyboard project this acquisition doesn't come as any real surprise,” Wesson said.
The blogging platform has already made small steps into the advertising world. Six month ago Tumblr allowed brands into the Tumblr platform by allowing them to buy 5% of impressions on its Tumblr Radar service, which aggregates the best content from high profile users.
The Yahoo! approach is likely to differ from the Facebook strategy of selling sophisticated ad units, and will instead focus on allowing brands to create native advertising content that becomes part of the social stream.
“It is all about how advertising gets integrated into the platform,” Wesson said. “The sweet spot is where brands tell a story so it doesn't feel like advertising. Platforms like Buzzfeed and Mashable do this well with the use of branded content that is of value to its target audience.”
Of course, Tumblr being a poster child for expressive talent means the user community has reacted emotionally to the impending acquisition.
One Tumblr user said that Yahoo! will be very careful not to wreck Tumblr: “The point being, Yahoo isn’t looking to buy talent, technology, or a quick profit in Tumblr. It’s looking for relevance. It’s knows that when you drop a billion to buy a cool friend, you don’t immediately screw it up by doing something massively uncool.”
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